3 Important Questions to Ask For Creative Deal Making

The stats for how many investors are in Australia are out there, and they are quite high compared to many countries. Sadly though where they have drawn the line as to what is an investor and what is not is pretty low.

 

If you own an investment property – then you are an investor.

 

Well, that may be, but it’s also like saying if you own a car then you are a race-car driver. If you own a surf board, then you are a big wave surfer… If you own a dog, then you are a vet.

 

Dictionary.com’s word of the day: paralogize – to draw conclusions that do not follow logically from a given set of assumptions.

 

…and it seems to me that just because someone has some spare money and buys a second house does not really make them an investor.

 

It just makes then the owner of two houses.

 

If you bake a cake once, does that make you a baker? No – of course not.

 

The idea of who is an investor is really about generating more tax dollars than it is an accurate statement of the business of property investing.

 

In a round about way I’m coming to this: There is a profound difference between the strategies, thinking and actions taken by an investor as opposed to the type of investor that buys a second house.

 

Most people buy a second house, perhaps fix the place up a bit and rent it out, waiting, hoping, praying that the value goes up over time.

 

Most of them buy properties that are negative cashflow.

 

Most of them never get the returns, the profit or the lifestyle they’d hoped for when they vaguely thought about becoming an investor.

 

It’s harsh – but it’s the truth.

 

Investing is a creative game. You’ve got to be able to think outside of the box all the time.

 

When I teach people commercial investing, I have to make sure that they have the tools and strategies to think creatively about the deals they do.

 

What can be done with the place?

 

Where are the upsides?

 

Where are the opportunities here and how can you action them?

 

These questions get them thinking and looking for the opportunities that others miss.

 

There are many strategies you can use to get higher returns on your commercial property that are just not available to you when you invest in residential.

 

But when your property is zoned commercial you have a lot more scope to play.

 

Just a simple thing like signage, if you are in a high traffic area, can leverage huge boost in returns – but there are also several pitfalls you need to watch out for.

 

Choosing the right property in terms of income streams, strata titles, parking, rear lane access, additional rentable spaces.

 

Just recently one property I was looking at was making an extra $150,000 a year from upsides like this – and this was on top of the rent they were getting from the tenant.

 

Using these creative ideas for making more money not only brings in more income for you but it also increases the value of the place substantially.

 

More often than not though I find properties where the current owners just don’t know what they are sitting on, and neither do the agents.

They see what is there, but miss what could be there.

 

Yes, I know agents love putting in “Development opportunity STCA”. I see that all the time, only to find that the council would approve a development there “Over their dead body.”

 

It’s just a thing that agents use to make it seem more attractive where they don’t have to take any responsibility for it not working.

 

Hidden upsides are an entirely different thing. They are the fruit of creative thinking. Thinking outside the box to answer the questions:

 

What can be done with the place?

 

Where are the upsides?

 

Where are the opportunities here and how can you action them?

 

Answer these questions, and all kinds of hidden potential will reveal itself to you

 

 

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